Last checked at 23 Mar 2020 07:00
23 March 2020
ZOO DIGITAL GROUP PLC
("ZOO", the "Group" or the "Company")
Pre-close Trading Update
ZOO Digital Group plc, a world-leading provider of cloud-based localisation and digital distribution services to the global entertainment industry, today issues the following trading update in respect of the year ending 31 March 2020.
Group revenue for the year is expected to be approximately $30m, representing an increase of around 4% over the prior year and with H2 revenues up at least 12% over the first half. Localisation and digital packaging revenues are expected to grow by around 10% to $27m.
The Company has successfully executed its core strategy of partnering with major media companies to provide localisation and digital packaging. This resulted in the company's first appointment to deliver end-to-end services, two further engagements as a preferred vendor and the successful deployment of ZOOstudio for managing OTT localisation and digital packaging operations. These recent successes demonstrate that our software, coupled with our industry knowledge and skills, are gaining traction in the market for Over The Top (OTT) localisation and digital packaging. We have continued to invest in our capacity to deliver these services throughout the period to take advantage of a growing market opportunity. As a result, the Company expects to report EBITDA for the year of not less than $2.2m, up from $0.4m in the prior year period.
The success in winning new long-term service contracts and building the necessary software integrations has meant that revenues for FY20 have been weighted to the second half, with H2 revenues of approximately $16m, up 12% on last year. This has also impacted short-term working capital and the year-end cash position is expected to be an overdraft of circa $1m, utilising a third of our facility. Shortly after the year end we expect this position to reverse as our customers, primarily major global media companies, settle their invoices and cash should exceed $2m. The Board does not anticipate a requirement for any additional working capital.
We are currently seeing a renewed focus on the localisation of back catalogue titles from a broader range of clients as demand for content for the OTT platforms gathers pace. This follows a period during which we have experienced some softening of sales due to a temporary hiatus of orders as our customers have implemented business continuity plans. Regarding original content, the COVID-19 outbreak is impacting our customers, with new title production being significantly hampered due to restrictions on travel and group gatherings. However, the Company's strategy of delivering services through proprietary cloud-based software provides natural resilience in these circumstances; steps have already been taken for staff to work from home without any significant disruption to production, and our network of freelancers is largely unaffected.
As we approach the start of the new financial year we are currently experiencing higher levels of interest in our cloud-based localisation services from major media companies. Given that the full impact of COVID-19 on our customers remains unclear, the Board does not believe it is prudent to provide guidance on the potential full year outcome for FY21 and FY22 at this time. Due to the robustness of ZOO's business model and the strength of its customer relationships, the Board is confident of being well positioned for growth and remains confident in the long-term success of the business.
The Company has noted the FCA moratorium on the publication of preliminary results and will provide an update as to when it intends to publish its full year results to 31 March 2020 in due course, in the meantime ZOO will continue to update shareholders as and when appropriate.
The information communicated in this announcement includes inside information for the purposes of Article 7 Regulation 596/2014.
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About ZOO Digital Group plc:
ZOO Digital is a provider of services allowing TV and movie content to be subtitled and dubbed in any language and prepared for sale with all major online retailers. ZOO's clients are some of the best-known brands in the world including major Hollywood studios, global broadcasters and independent distributors.
ZOO's point of difference in the marketplace is its development and use of innovative cloud technology. This ensures that content is localised in any language and delivered to all the major online platforms such as Amazon, iTunes, Google and Hulu with reduced time to market, higher quality and lower costs. ZOO's agile, cloud-based business model enables clients to respond to market trends, scale easily with business growth and capitalise on new routes to market in the fast moving and evolving digital industry.
ZOO operates from the entertainment hubs of Los Angeles and London with a development and production centre in Sheffield. Its full-service proposition includes digital distribution, subtitling & captioning, metadata creation & localisation, dubbing, artwork localisation, workflow and asset management.
www.zoodigital.com